Market volatility hits pre-crisis low - but how long can it last?

Market volatility has dropped to lows not seen since before the financial crisis, prompting expectations of a sharp spike, but some strategists suggest it could remain anchored for years to come.

The Market Risk Index, which measures implied volatility across asset classes including rates, currencies, and commodities, is trading at -1.17, not far off the lows seen in 2007 before a significant spike above the 3.5 mark in 2008. The VIX US equity volatility index, meanwhile, fell to its lowest level since February 2007 last Friday. The huge drop from levels seen at the peak of the crisis means some investors now believe it is a good time to invest in volatility as an asset class, using derivatives such as variance swaps or actively managed options portfolios. Guy Stern, head o...